Taste & Nutrition recorded volume growth in all regions and Consumer Foods recorded volume growth across the business.
The group’s COI increased by 9.8% to €875.5 million ($995.5 million). This represented a trading profit margin increase of 40 basis points, driven by the recovery of operating leverage, portfolio mix and net contribution from acquisitions and divestitures, partially offset by pricing, supply chain and KerryExcel investments.
The group’s EBITDA of €1.1 billion ($1.25 billion) represents a margin of 14.7%.
Adjusted constant currency earnings per share increased 12.1% to 380.8 cents (2020: 9.4% decline). Basic earnings per share increased to 430.6 cents (2020: 313.0 cents). The Board of Directors has recommended a final dividend of 66.7 cents per share, an increase of 10.1% over the 2020 final dividend. Together with the interim dividend of 28.5 cents per share, this brings the total dividend for the year at 95.2 cents, an increase of 10.1% over 2020.
Net capital expenditure was €315m/$358m (2020: €311m/$354m) and research and development expenditure was €297m/$338m (2020: €282m/ $321 million) as the group invested in its strategic priorities of taste, nutrition and emerging markets. The group achieved free cash flow of €566m/$643m (2020: €412m/$468m) representing a cash conversion of 84% over the year.
Strategic portfolio developments
Kerry announced strategic developments with acquisitions.
In the area of food waste, specifically in food protection and preservation, the company finalized the acquisition of Niacet, which provides food protection and preservation technologies. It also completed the complementary acquisition of National Vinegar Co., adding additional fermentation capacity and supporting the group’s growth strategy in natural preservation.
Under Health & Bio-Pharma, Kerry acquired Biosearch and an agreement was reached to acquire Natreon.
Kerry said it strengthened its biotech capabilities with the acquisition of Enmex, an enzyme maker in Mexico, and entered into an agreement to acquire c. 92% of the issued share capital of c-LEcta, a German company specialized in precision fermentation, optimized bio-processing and bio-transformation for the creation of enzymes and targeted ingredients with high added value.
Kerry also acquired Afribon, a producer of flavors for food and beverage applications. Since the end of the year, Kerry has agreed to acquire Almer, a dairy flavor company based in Johor Bahru, Malaysia.
During the year, Kerry also completed the divestiture of its consumer food meats and meals business to Pilgrim’s Pride.
Taste & Nutrition
Taste & Nutrition revenue increased 9.0% to €6.3 billion ($7.16 billion) for the year. This reflects volume growth of 8.3%, price growth of 1.3% and a contribution from acquisitions net of disposals of 2.1%, partially offset by the impact of unfavorable foreign exchange translation 2.7%.
The region’s revenue rose 4.9% to 3.2 billion euros ($3.64 billion) during the year. Kerry said growth in the region was achieved despite the impact of supply chain and workforce challenges in the industry.
The restaurant channel in North America continued to show good growth, the company said, with a strong year-end in quick service restaurants and coffee chains in particular, supported by brands and Kerry solutions to reduce the complexity of background operations.
The LATAM region recorded growth: volume growth in Brazil was driven by the performance of beverages and ice cream, while growth in Mexico was driven by snacks.
During the year, Kerry started production at its new factory in Rome, Georgia, and at the tasting factory in Irapuato, Mexico.
The region’s revenue rose 14.6% to 1.6 billion euros ($1.82 billion) during the year.
Growth in the retail channel was driven by performance within the food EUM. Meat has seen growth through innovations in plant-based alternatives to meat, launches with natural preservation, and increased demand for healthier coating systems. Bakery and confectionery delivered through texture systems and gourmet innovations. Dairy saw growth in premium and non-dairy ice cream lines, while international dairy markets reflected increased demand versus supply momentum. Within the beverage DUE, there has been growth with low alcohol/non-alcoholic beverages incorporating Kerry’s botanicals, natural extracts and sugar reduction technologies.
The restaurant channel achieved growth particularly in the UK and Southern Europe. This was widespread in end-use markets as customers expanded their menu lines and reintroduced limited-time offers throughout the year. Russia and Eastern Europe continued to generate growth in the retail and foodservice channels, led by meat and snacks.
The region’s revenue rose 14.8% to 1.4 billion euros ($1.59 billion) during the year. This reflects volume growth of 11.3%: overall growth in the region was led by China and the Middle East.
The company opened a new tasting facility in Durban, South Africa, made progress on the development of a new tasting facility in Jeddah, Saudi Arabia, and announced the development of a new tasting facility in Karawang , in Indonesia.
Consumer Foods reported revenue down 10.5% for the year to 1.1 billion euros ($1.25 billion).
Dairy posted strong overall growth with a strong final quarter, Kerry said. This was driven by volume growth in the Strings & Things snack range, with the spreadable butter ranges also performing strongly.
Kerry said its markets remain very buoyant with a still good demand environment, despite the Covid-19 backdrop and supply chain challenges in the industry. Although market conditions remain uncertain, the company said it is strongly positioned for growth.
Kerry said he will continue to strategically evolve his portfolio and invest capital aligned with his strategic priorities and key growth platforms.
The group’s earnings forecast includes net dilution from recent portfolio changes. Kerry expects to achieve adjusted earnings per share growth in 2022 of 5% to 9% at constant exchange rates.
Edmond Scanlon, CEO of Kerry, said: “We ended the year on a high note with excellent growth across our businesses. In 2021, we achieved strong overall growth across all regions with Group sales of €7.4 billion, driven by volume growth of 8.0%. In the Taste and Nutrition retail channel, we continued to show strong growth, while we delivered excellent growth in the restaurant business with business volumes in all regions above 2019 levels in the fourth quarter. This growth was well distributed across our end-use markets, with beverages, bakery and meat performing particularly strongly.
“The year was important for Kerry from a strategic point of view. We continued to strengthen our position as a market-leading taste and nutrition company with a number of strategic portfolio developments, while strengthening our local footprint to support our growth ambitions, which we outlined in as part of our strategy update during Capital Markets Day in October.
While recognizing that the current market environment and inflationary pressures continue to present challenges to our industry, Kerry is better positioned and more resilient than ever as we enter a new strategic cycle. Our range of earnings guidance for 2022 reflects the Group’s strong growth prospects and the net effect of recent portfolio developments.
Kerry’s annual report will be published in March and the general meeting will be held on April 28.